What Happens If All Of Your Tenants Move Out Of Your Investment Properties?
Dilleen Property Group 2021
Often clients will ask what happens if all of your tenants from your investment properties move out? Do you sell the properties? How would you manage this?
The Importance of Landlord Insurance
Landlord insurance is crucial for every property investor! What landlord insurance does is, if you own properties and a tenant moves out unexpectedly, breaks their lease, or breaks anything internally, the landlord insurance will cover it. If your tenants break their lease and they move out, the landlord insurance will cover this and pay the rent into your account so you won’t lose any money. There are different kinds of insurance companies out there that you can use, for example, the Big Banks, Terri Scheer and more. I personally use Terri Scheer.
The Importance of Diversifying Your Property Investment Portfolio
I find it's always best to diversify your property portfolio in different locations, such as Sydney, Brisbane, Gold Coast, Adelaide, and Cairns. This way you can spread your risk and avoid potentially bad situations. It’s also ideal to find properties located in metro areas that are going to have an abundance of tenants. I personally stick to properties that are 20-30 minutes from the heart of the CBD, close to the shops, schools, and amenities. I don’t buy properties out in the middle of nowhere where there is a population of 5000 people. This is another way you can offset and further mitigate your risk as much as possible.
The odds are that you’re always going to have tenants in place, and the longest I've ever had no tenants for was a couple of weeks. Having the right property manager and team is very important when looking for a new tenant. You need a property manager you can trust and that will attract the right tenants with their expertise and marketing campaigns. If you buy within metro areas, undoubtedly you shouldn’t have an issue getting a tenant to move in as soon as possible.
The Importance of Owning Multiple Investment Properties
I prefer to own multiple properties with a combined total of $5-6 million dollars, rather than one property worth $5-6 million. The reason for this is if the tenants move out and the property goes vacant you have lost your passive income by putting all your eggs into one basket. By owning multiple properties, you can reduce the risk of losing all of your rental income. If a few tenants move out from your properties you will still be earning a passive income from the other properties you hold, and still have a cash flow surplus. In my experience when I have had 3-4 vacant properties because the rent is so high in comparison to the expenses, I was still able to service it myself.
Throughout my property investment journey one thing I have learnt is to not sweat the little stuff. You have to get out of your comfort zone and be willing to learn. In the beginning of my journey I never felt ready, and I didn't feel comfortable buying property, however the numbers made sense. It’s so easy to get started, you just have to be motivated and get your savings on track! Starting small and gradually building a property portfolio over time is key.
Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
